YAMOUN, West Bank (Reuters) - Israeli forces killed a Palestinian gunman in the occupied West Bank on Tuesday, saying he was the head of a militant cell responsible for an ambush in which a Jewish settler was shot dead.

Israel had been hunting the final member of the cell that it said killed Rabbi Raziel Shevah in a drive-by shooting on Jan. 9. Commandos already killed one of the gunmen involved and captured a another.

Security forces entered the West Bank village of Yamoun in the early morning in search of Ahmad Nasr Jarrar, police spokesman Micky Rosenfeld said. They found him there armed with an automatic weapon.

"As a result of the operation the terrorist was shot and killed," Rosenfeld said.

Hundreds of Palestinian residents gathered at the scene after the Israeli troops pulled out.

The governor of the Palestinian city of Jenin said they had been informed by Israeli authorities that Jarrar was dead. He condemned the Israeli forces for killing him.